Wit. Wisdom. Value Investing.
I have been re-reading Nassim Taleb’s Fooled by Randomness. The book is about “luck disguised and perceived as non-luck (that is, skills) and, more generally, randomness disguised and perceived as non-randomness (that is, determinism).”
It’s an enlightening read in its entirety, but here are seven key ideas I have picked up from the book.
[Read more…] about Seven Big Ideas from Fooled by Randomness
Value Investing Workshop in Bangalore (9th Sept), Chennai (23rd Sept), Mumbai (30th Sept). Click here to register now. Few seats remain!
This is the third part of the series on books that have inspired me the most. Read Part 1 and Part 2. Here are the books I have profiled so far –
1. Life and Living
In the first part of this series, I profiled books on life and living that have inspired me the most. In this second part, I cover books on learning, thinking, and decision making (more coming in the third part).
Before I begin, here’s something worth reiterating. You should not read good books for the sake of talking about them. Mentioning them by name may give you the appearance of literacy, but you do not have to read them to outshine someone else at a dinner party. Reading is a means toward living a good human life. It’s a means toward living the life of a free man/woman.
Anyways, what follows below is not an exhaustive list but is made up of books I go back to time and again, and return wiser.
Once upon a time, there was a young man who got his dream job in the financial services industry, thought he could make it big one day and worked hard at it, then got disillusioned and disgusted by what he saw around, and finally quit to live a life of greater peace and fulfillment, while pursuing his passion in value investing.
If I had not read Guy Spier’s The Education of a Value Investor, and someone told me this story, I would have believed it was mine.
This is truly my story, but Guy has captured this beautifully in his wonderful book, which I completed reading recently.
Of course, Guy gas written about his personal story, but it resonated so much with me that I have kept this book in my must-read book advisory list for any budding value investor.
Of course, there are great differences between me and Guy –
Anyways, coming back to Guy’s story and his book, as I mentioned, I could relate to a lot of his experiences, thoughts, and lessons. I have pulled out just five of them that have guided me well.
These thoughts not only hold importance in investing but in life as well. In fact, I find Guy’s book amazing because it talks less about value investing rules and more on a value investor’s character development.
In Guy’s own words…
…this book is also about the inner game of investing, and by extension, the inner game of life. As I’ve come to discover, investing is about much more than money. So as your wealth grows, I hope you will also come to realize that the money is largely irrelevant. And what you will want to do with the bulk of your wealth is give it back to society.
So, here are those five meaningful thoughts that Guy writes about in his book, which I believe serve a great learning for most people aspiring to find a greater meaning in life and become better as value investors.
[Read more…] about 5 Lessons on Life & Investing from Guy Spier’s Education of a Value Investor
If the history of stock market is anything to go by, investors often make decisions that can undermine their ability to build long-term wealth. As such, it is often very valuable to look back in history and study closely the principles that have guided the investment decisions of some of the best minds and practitioners in this field through both good and bad markets.
By studying these experienced investors, we can learn many important lessons about the mindset required to build long-term wealth.
With this goal in mind, here is a special e-book that aims to offer the wisdom of some of the best investment minds of current times from India and abroad.
[Read more…] about The Wisdom of Intelligent Investors (Special E-Book)
Stop right here if you are looking for a stock idea from me, because most of my multibagger ideas are outside the stock market. 😉
But if you are still reading this, you may be interested to know the multibagger Diwali idea I am going to share. Don’t you?
Well, it’s festival time and I won’t waste much of yours.
My multibagger idea for this Diwali is to start a chain of gifting books that inspire.
I am starting with gifting one book that has inspired me to one person I know. I expect that person to then pay it forward by gifting one book to one of his or her friends, and the chain continues…till someone does not want to gift the book. 🙂
You don’t have to wait for someone to send you a book before you can begin.
Mahatma Gandhi said, “Be the change you want to see in this world.” So today I urge you to start the chain you want to be a part of. Anyone reading this can start his or her own chain. Trust me, you can’t even imagine how far the ripple effects of your small act can reach.
Lily Hardy Hammond wrote, “You don’t pay love back; you pay it forward.”
Ralph Waldo Emerson, in his 1841 essay titled Compensation, wrote, “In the order of nature we cannot render benefits to those from whom we receive them, or only seldom. But the benefit we receive must be rendered again, line for line, deed for deed, cent for cent, to somebody.”
Same is with knowledge. The only way you can pay back for the knowledge you have received is to pay it forward. Become a funnel, says Prof. Sanjay Bakshi, not a sponge.
One way to do that is to teach someone what you have learned. The other is to simply gift a good book.
But then, how does gifting a book make for a multibagger idea?
Well, knowledge, as you would have heard Warren Buffett say a lot of times, builds like compound interest. And because knowledge builds like compound interest, it gives you an exponential return. And what causes an exponential return makes for a multibagger over time.
Now, when you get a book as a gift, and you read it, it adds to your knowledge. And when you pay it forward by gifting a book to someone else and that person reads it, it adds to his/her knowledge. Over time, as a society, we get more knowledgeable and hopefully wiser. And that’s the idea of starting this chain.
So this Diwali, read a book…gift a book…and spread the light of wisdom all around you.
Anshul and I wish you a very happy Diwali and prosperous New Year.
P.S.: To ensure that this movement benefits maximum number of people, gift the book to someone who isn’t part of this already. So Anshul and I, by default, shouldn’t be in your chain.
A wise man once said, “I am a great believer in luck. The harder I work, luckier I get.”
Believers in this saying usually belong to the meritocratic school of thought. They claim, “If you’re good, you don’t need luck.”
If you’re successful it’s a natural human tendency to assume the credit for your success. After all, you must have worked hard for it and you surely deserve it. But when I think of my life, I have seen and met many individuals for whom, in spite of working extremely hard, success remained elusive.
Goes with saying that I have also met those who achieved great heights with relatively much lesser effort. These are the people who manage to attract much more than their fair share of luck. Usually, we look down on such people with some envy and disdain. It’s assumed that any success founded on an element of luck is inherently undeserving.
Do you know someone who always manages to find himself in the right place at the right time? Before you label him as lucky, ask yourself – do you think his luck is out of pure randomness? Perhaps he has a knack for arriving at the right place and at the right time.
Common sense tells us that luck can’t be controlled and it’s all about chance and probability. But what if someone told you that there was a way to control luck? Not in an esoteric way but in a rational way? If you feel like scoffing at such an idea, I would urge you to have an open mind. Just for the sake of curiosity.
[Read more…] about 5 Ways to Create Luck in Investing and Life
Would you buy something if it were discounted from Rs. 500 to Rs. 200? May be.
What if it was discounted from Rs. 500 to Rs. 10? Possibly.
How about if it were discounted to zero? Absolutely!
Getting something for free feels good. Isn’t it?
But don’t get too excited. Although the ‘cost of free’ is zero, it’s also a source of irrational behaviour. Remember those pile of free key chains, free pencils and notepads lying at some corner of your house? Well that pile may be harmless but there are other situations where this irrational affinity for FREE stuff can cause us to make bad decisions. The Zero Price Effect says that we often pay too much when we pay nothing.
I regularly give in to this zero price effect in my day to day decisions. Amazon offers zero shipping charges if I make a minimum purchase of Rs. 499. Every time I order a book which costs less than 499, I end up buying another book (which I don’t plan to read) just to avail the free shipping offer. I just can’t let go off the free offer.
So what explains our unusual love for FREE! stuff?
[Read more…] about Latticework of Mental Models: The Zero Price Effect
As a kid, one of the most fascinating thing I ever witnessed while conducting my own zoology experiments, was to watch a lizard leave it’s tail behind.
I am sure many of you must have found it intriguing that a lizard, if threatened, can voluntarily let go of its tail. It’s common in many lizard species to shed a part of their tails. It’s a survival mechanism. The trick allows these reptiles to escape when captured by the tail by a predator. The detached tail writhes and wiggles, creating a deceptive sense of continued struggle, distracting the predator’s attention from the fleeing prey animal.
It’s a marvellous self-preservation mechanism that evolution has given to lizards. And what’s more fascinating is that the lizard can grow that tail back in a matter of few weeks. What a robust way to deal with loss!
If that sounds cool then you must also know about Hydra. It is a serpent-like creature from Greek mythology. Hydra grows two new heads every time you cut one off. In Indian mythology, there is a similar character called Raktavija. A demon (asura) who who has the magic boon that every drop of blood shed from his body gives rise to another Raktavija (literally the blood borne).
These apocryphal characters are very important metaphors to improve our understanding about fragility and robustness.
What is fragile? Something which breaks or disintegrates easily when subjected to a stress or disorder. Isn’t it?
[Read more…] about Latticework of Mental Models: Antifragility